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E-Commerce Environment Analysis in Chinese Market Summary <MBA Degree Thesis> AY 2016 E-commerce Environment Analysis in Chinese Market Based on Case Analysis of Amazon China 35142339-1 LI JIAMIN MANAGEMENT OF EXPERIENTIAL VALUES C.E. PROF. YAMAMOTO, HISATOSHI D.E. PROF. NISHIYAMA, SHIGERU D.E. PROF. MANO, YOSHIKI Summary Electronic Commerce (E-commerce) has become an essential part for most of the people and people are now getting used to the new pattern of shopping. Under this background, the whole E-commerce market would be expected to keep growing and expanding, and Chinese market would be one of the largest E-commerce market in terms of transaction volume, number of online shopper and penetration rate. In this case, the US giant Amazon also hopes to expand its business to this new but potential market and it expects that the business there would be just as successful as that in US. However, the fact is that after entering Chinese market for 10 years, Amazon China still can not beat such local competitors as Taobao, Jingdong and Suning. There must be internal and external reasons to explain it. Starting from the theory of E-business and E-commerce, the thesis firstly tries to clarify the definition of E-business and E-commerce. Although in most cases people could use the two terms interchangeably, technically speaking there are some differences in the two terms. Then the thesis takes a quick view of the historical development of the E-business in China, hoping to 1 understand the essence and main features of E-business in China and compare them to that in global market. Secondly the thesis focuses on the analysis of the current E-commerce market in China and global market. Because of the difference of culture, technology, economy, and other factors, the pace of developing E-commerce in different areas would be different, and therefore in China there are some unique features. And in this part the thesis spends some effort to analyze the largest competitor—Taobao, in terms of market shares, online traffic, payment systems and supply chain. When discussing about the E-commerce market, Taobao is an unavoidable brand and all the E-commerce companies have to come up with some ideas to deal with it. By doing this, the thesis hopes to figure out the features of Chinese E-commerce market and then come up with some ideas for Amazon to gain more market shares in the local market. The third chapter is mainly about the current performance of Amazon China. The customer’s purchasing behaviors would be different in each areas due to different reasons, and by analyzing the online shopping trends for customers on Amazon, the thesis hopes to understand the target customers for Amazon and what is happening on Amazon and therefore it might be possible to forecast what would happen in the future so that Amazon could set strategies accordingly. Also how does Amazon localize its business is also mentioned here, and the thesis hopes to follow the current strategies from the management and come up with something special and innovative. The next part is mainly about the SWOT analysis of the Amazon China and tries to estimate the strengths and weaknesses of Amazon China. The purpose of the thesis is to evaluate the current performance of Amazon in China and try to help it get more profits, so a SWOT analysis would help have a better understanding of the current position of Amazon and check if it is possible and needed for Amazon China to fight in the future. And the last 2 part mainly introduces the potential strategies that could be applied by Amazon China, such as the cross-border business and fresh-food market. The thesis hopes to conclude the analysis of global and Chinese market, the current performance of Amazon China and the SWOT analysis and then come up with some practical and feasible ideas. KEY WORDS: Amazon China; E-commerce market; SWOT Analysis; Cross-border Business; Taobao; Online Shopping; Purchasing Behavior 3 <Inside Cover> E-commerce Environment Analysis in Chinese Market Based on Case Analysis of Amazon China 35142339-1 LI JIAMIN MANAGEMENT OF EXPERIENTIAL VALUES C.E. PROF. YAMAMOTO, HISATOSHI D.E. PROF. NISHIYAMA, SHIGERU D.E. PROF. MANO, YOSHIKI 4 TABLE OF CONTENTS 1. Introduction.....................................................................................................................................8 2. Review of Current E-commerce Environment...........................................................................17 2.1 Global E-commerce environment features……………………………………………………18 2.1.1 Matured capitalized market...............................................................................................19 2.1.2 Mobile-oriented Business Era...........................................................................................20 2.1.3 The development of Sharing economy .............................................................................21 2.1.4 The emergence of online shopping festivals.....................................................................23 2.2 Chinese E-commerce environment ..........................................................................................24 2.2.1 The growing E-commerce market scale............................................................................26 2.2.2 The spending power of China online shopper ..................................................................27 2.2.3 Mobile shopping market surpassing the PC client............................................................30 2.2.4 Urban versus rural.............................................................................................................32 2.2.5 The Chinese E-business giant: Alibaba ............................................................................33 3. Review of the current situation of Amazon China.....................................................................37 3.1 Online shopping trend on Amazon China ................................................................................39 3.1.1 Customers are younger and more well-educated ..............................................................39 3.1.2 Online shopping penetration rate is increasing.................................................................40 3.1.3 Desired products are diversified and internationalized.....................................................40 3.2 A response to the Chinese market by Amazon.........................................................................41 3.2.1 Kindle unlimited service...................................................................................................43 3.2.2 ‘Cross-border purchasing’ service ....................................................................................45 3.2.3 Official flagship store in Taobao ......................................................................................46 4. SWOT analysis of Amazon China...............................................................................................47 4.1 Amazon’s strengths in Chinese market ....................................................................................47 4.1.1 A large capital accumulation ............................................................................................48 4.1.2 High efficient fulfillment centers......................................................................................50 4.1.3 Accumulated media resources ..........................................................................................51 4.1.4 Cross-border shopping business preparation ....................................................................52 4.2 Amazon’s weaknesses in Chinese market................................................................................54 4.2.1 Taobao’s incomparable advantage of online traffic..........................................................54 4.2.2 Amazon’s slow localization process.................................................................................57 4.2.3 Different attitudes to Email marketing promotion............................................................60 4.3 Amazon’s opportunities in Chinese market..............................................................................62 4.3.1 the future trend: C2C to B2C............................................................................................63 4.3.2 Growing Chinese E-book Market .....................................................................................64 4.3.3 The Last Cake on Chinese Online Market: Fresh Food Market .......................................68 4.4 Amazon’s threats in Chinese market........................................................................................74 4.4.1 New taxes policy on cross-border e-commerce retail imports..........................................75 4.4.2 Local competitors and mobile era.....................................................................................79 5. Suggestions on the Future Action for Amazon China ...............................................................82 5 5.1 ‘Brick and Click’ strategy ........................................................................................................82 5.2 Cross-border business being the main weapon.........................................................................84 5.3 Cooperation with local competitors..........................................................................................85 6. Conclusion .....................................................................................................................................87
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